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Gold dips after Monday rally as dollar strengthens

[NEW YORK] Gold prices fell 0.5 per cent on Tuesday, retreating a bit from the previous day's rally as a stronger US dollar reduced the appeal of safe-haven investments, and oil prices also dipped.

On Monday, bullion rose as much as 1 per cent for its biggest daily rise in six weeks, after news of a string of high-profile arrests in Saudi Arabia boosted oil to a 2-1/2-year high.

Tuesday's retreat from that rally stayed within a US$20 range, noted Bill O' Neill, partner at Logic Advisors in Upper Saddle River, New Jersey.

"Gold stuck within the US$1,260-US$1,280 range," he said. "The overall atmosphere for gold right now is not particularly positive. The safe-haven demand just isn't there."

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Spot gold was down 0.5 per cent at US$1,275.30 an ounce by 1.47pm EST (1847 GMT), while US gold futures for December delivery settled down US$5.80, or 0.5 per cent, at US$1,275.80 per ounce.

The dollar rose 0.3 per cent versus the euro as investors bet that monetary policy would continue to diverge between the United States and the euro zone.

Oil prices retreated after rallying Monday on an anti-corruption purge led by Saudi Arabia's Crown Prince Mohammed bin Salman. Some of the kingdom's political and business elite were arrested.

Gold and crude oil are priced in US dollars. A stronger dollar can pressure prices of dollar-priced commodities, which become more expensive to investors using other currencies.

On Monday, gold also drew support from jitters linked to US President Donald Trump's trip to the Far East, MKS's head of trading Afshin Nabavi said.

Mr Trump's visit to South Korea could provide gold with some support in coming days, traders said.

Among other precious metals, silver was down 1.6 per cent at US$16.96 an ounce. Its session high of US$17.27 was the highest since Oct 20.

Silver outstripped gains in gold during Monday's rally, ending the day 2.5 per cent higher. That pushed the gold/silver ratio to its lowest since mid-September at 74.39.

"Not only was silver pulled up by gold yesterday, its gains were also twice as pronounced," Commerzbank said in a note. "Silver ... is only just below the 200-day moving average. Any rise above this mark could spark technical follow-up buying and lend further buoyancy to the silver price."

Platinum was down 1.3 per cent at US$922.40 an ounce, while palladium was down 0.4 per cent at US$995.60 per ounce.